It seems to me that the debate about “ACES” needs to be viewed with one eye on the projected production curve for Alaskan oil.   All of the curves I have seen show that the amount of oil that is left to be pumped out of the ground is going away rapidly.  With this in mind, the question becomes “How can we get the most, for the last of our oil?”  At the beginning of the process of trying to monetize a large deposit of oil, creating a very pro-business tax climate seems like a good way to encourage investment and build long-term relationships.   Low taxes encourage multiple players to get involved; the free market will work its magic and give us a healthy industry with efficient, effective operators for the long term.  

            Now that we are nearer the end however, I’m not sure that “Past performance is indicative of future results”.  What worked in the past is not necessarily going to be effective under present circumstances. 

            30 or 40 years ago was a time to offer low taxes and then hope that producers show up.  Now that we are much nearer the endgame, in my opinion, it is time to have specific strings attached to any lowered taxes.  As we near the end of the oil, the incentives turn in favor of short-term gains at the expense of any long-term relationship.  Now is not the time to lower taxes and “hope” that oil companies do what we want.  I believe that any incentives (lower taxes) that we offer should be tied directly to the outcomes that we desire.  To do otherwise seems like creating an opportunity to look back 20 years from now and say, “ We should have known better; we were so naïve.”

            Let’s not kid ourselves into thinking that oil companies aren’t looking at the same projected production curve that we are.   Let’s also not kid ourselves into thinking that oil companies are trying to do anything but get the most profit possible from their investments.  They are corporations- that is what their shareholders expect.  The question that they are asking is  “How can we pay the least for the last of the Alaska oil?”  In my opinion the governor’s proposed tax plan is a much better answer to the corporations’ question than it is to ours. 

Joshua Hall